SIG plc, the Sheffield-based international building materials supplier, said it expects full year like-for-like sales down 2% on the prior year, with revenues of £2.762 billion.
In a trading update for the year ended December 31, 2023, SIG said it expects underlying operating profit “to be in the upper half of the guidance range of £50m to £55m provided previously.”
In its summary, SIG said: “The group has managed effectively the impact of increasingly challenging market conditions through the year, delivering robust trading results relative to the market.
“As anticipated and reported in our October 2023 trading update, demand softened in most of our geographic markets in the second half.
“Despite this, we continued to benefit from execution of our commercial strategy, retaining a strong focus on customer service across our branch network and ensuring we maintained strong momentum.
“Subject to audit, the board expects to report FY23 revenues of £2.76bn, and underlying operating profit in the upper half of the guidance range of £50m to £55m provided in October.
“The group expects to report a modest free cash inflow for the year of c£4m, helped by solid working capital management, with year-end gross cash balances of around £132m (2022: £130m).
“The movement in cash balances in the year reflects the free cash flow, partially offset by small currency movements and deferred acquisition costs.
“The group’s revolving credit facilityof £90m remained undrawn as at 31 December 2023.
“The group expects to report net debt as at 31 December 2023 of c£457m on a post IFRS 16 basis (2022: £444m), and c£154m on a pre IFRS 16 basis (2022: £160m).
“The movement in post IFRS 16 net debt is due mainly to an increase in lease liabilities of c£19m, mostly a result of market driven inflation, combined with some investments in new branches.
“This was partially offset by the cash movement and a favourable currency movement on bond debt. Leverage at 31 December 2023 is expected to be around 3.4x and 2.7x on post and pre IFRS 16 bases respectively.”
SIG CEO Gavin Slark said: “Despite challenging market conditions across the European building and construction sector, the group has delivered a robust trading performance, through a strong focus on our customers and the great efforts of all our people.
“In my first year as CEO, I have been impressed by the opportunities that exist within SIG’s portfolio for strengthening our operating performance and accelerating our specialist businesses, and for delivering more profitable growth over the medium term.
“Whilst we expect continued softness in market conditions in 2024, we are confident in our ability to manage through this current phase of the cycle and to continue to strengthen our operations, ready to take advantage of the significant long-term opportunities for the group as markets recover.”